2026-03-12 09:47Financial Data and Key Metrics Changes - The underlying profit increased by 27% year-on-year to HKD 8.62 billion, primarily due to the sale of non-core assets in Miami and Hong Kong [3][16] - Recurring underlying profit declined by 3% to HKD 6.26 billion, largely due to the loss of rental income from the disposal of Brickell City Centre and lower office rental income in Hong Kong [16][17] - The company declared a full-year dividend of HKD 1.15 per share, marking a 5% increase year-on-year, consistent with its commitment to mid-single-digit annual dividend growth [4][18] Business Line Data and Key Metrics Changes - The office portfolio in Hong Kong experienced a 5% decline in attributable gross rental income, with overall occupancy at 91% [9][17] - Retail sales growth was positive across all malls in Hong Kong, with occupancy maintained at 100% [10][17] - In the Chinese Mainland, retail rental income increased by 2%, with overall retail sales up 7% year-on-year [11][12] Market Data and Key Metrics Changes - The Chinese Mainland portfolio now contributes 43% of the company's attributable gross rental income, with retail contributions exceeding those from the Hong Kong office portfolio [10][12] - The overall valuation of the investment property portfolio stood at HKD 268.3 billion, reflecting a 1% decrease from December 2024 [18][19] Company Strategy and Development Direction - The company is focused on an active capital recycling strategy, with HKD 100 billion investment plan aimed at driving growth over the next decade [4][7] - There is a commitment to enhancing shareholder returns and delivering mid-single-digit annual dividend growth [4][29] - The company plans to double its gross floor area in the Chinese Mainland by 2032, focusing on retail-led mixed-use projects in Tier 1 cities [7][12] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the resilience of the business despite current geopolitical tensions, citing strong performance in retail and office sectors [27][28] - The outlook for the office sector in the Chinese Mainland remains subdued due to high vacancy rates, but there is optimism for improved leasing activity in Hong Kong [28][29] - The company anticipates continued positive momentum in retail sales and foot traffic in the Chinese Mainland [27][38] Other Important Information - The company achieved significant sustainability milestones, including a 52% reduction in Scope 1 and Scope 2 emissions, and a commitment to net-zero emissions by 2050 [22][24] - The company has been recognized for its sustainability efforts, ranking number one in the Hang Seng Corporate Sustainability Index for eight consecutive years [21][22] Q&A Session Summary Question: Expectations for China retail momentum in 2026 and performance during Chinese New Year - Management expects positive momentum to carry into 2026, with double-digit improvements in retail sales and strong footfall in centers [36][38] Question: CFO succession and continuity in capital allocation priorities - Management confirmed continuity in strategy and capital allocation priorities, with a focus on mid-single-digit dividend growth [40][41] Question: Plans for issuing C-REIT and pre-leasing data for new retail malls - Management is monitoring the C-REIT market and is open to opportunities that enhance capital efficiency [47] - Pre-leasing is progressing well, with collaborative design processes for new malls [48][49] Question: Impact of Middle East conflicts on office decision-making and retail sales leakage - Management noted a pickup in inquiries and leasing activity, but anticipates some hesitation in decision-making due to geopolitical tensions [59] - Reduced leakage of retail sales to other markets has been beneficial for the company's malls in the Chinese Mainland [60] Question: Long-term impact of AI on office demand and portfolio mix - Management is actively considering the implications of AI on office demand and is focused on providing high-quality office products [62]